I am currently very busy with a couple of projects, so my posts are necessarily short.
Naturally, US markets reacted with a new all time high. Why? Because speculators have now "learned" from the previous Chinese episode in February-March that all is OK and that they should "buy on dips." Is so much conviction a sign of a healthy market? Or is it a delusion?
As the steamboat card sharpies accurately said, "you pays your money, you takes your chances." It is just that the odds are getting shorter these days , as current and former market regulators and central bankers all over the world are constantly reminding us. Except in the US, of course, where Greenspan is - once again - publicly ignored (and privately ridiculed) for his current version of "irrational exuberance" warnings. The rest are force-feeding the goose in the hopes it lays a clutch of golden eggs in the form of broad hoi polloi market participation, before it gets slaughtered and its liver becomes pate.
I, however, believe that il popolo at large has no extra money to invest (e.g. negative saving rate) and at best is simply buying on margin (new all time record in NYSE margin in April, $318 billion).
The real action is coming from leveraged hedgies plus foreigners re-investing the money gained from selling fluffy toys and flat screens to American consumers. In other words, the party is going on with very few party-goers in the nightclub, who have turned up the music volume to attract the passers-by. The role of Street "barker" has been given to the private equity funds..."Hey, hey, checkit out, checkit out .. 18.6 billion for this one, 32 billion for the other, how about this beauty, eh? Gotta be worth at least a fiddy, whaddaya say? C'mon, lotsa bootiful opportunities inside..."
Looks to me like they are putting lipstick on a whole lot of geese these days. But, hey, what do I know? Ask Hank.